Russia Is Close to Legalization of Cryptocurrencies

Last month Russia held two important events dedicated to cryptocurrencies and related technologies: A national forum organized by the government, and the biggest cryptocurrency conference in the country “Blockchain & Bitcoin Conference Russia.” I attended both events.

The conference attracted a record-breaking number of visitors (around 1000 guests and speakers altogether). In the course of these events numerous governmental officials shared their views on the possibility of regulation and legalization of cryptocurrencies on the national level. According to the numerous statements of the speakers in charge, Russia should expect a federal law, regulating the role of cryptocurrencies in national economics, by the end of the year and it certainly won’t be prohibitive.

Last December, the president of the country Vladimir Putin decreed to develop a digital economy in the country and initiated the creation of a cross-disciplinary group to study the blockchain technologies and possible risks of their implementation.

The head of cross-disciplinary governmental group Elina Sidorenko, in the course of the plenary forum of the Bitcoin&Blockchain conference, said that the group is going to suggest a draft of the law, regulating the cryptocurrencies, by July. That won’t be the first draft of a cryptocurrency law in the country, but according to the speaker, the general rhetorics of the government has drastically changed. During the previous years, the country saw some restrictive initiatives from the authorities: in 2014 the General Prosecutor’s office suggested to introduce criminal sanctions for those responsible for emission and exchange of  cryptocurrencies.

Speaking at the national forum Pavel Livadny, head of Finance Monitoring Governmental Agency,  highlighted that the governmental structure overcame the rejection phase and moved on to the constructive dialog. He added that cryptocurrencies have to be regulated, and only few countries want to ban their circulation.”

According to the head of the department of financial technologies of the central bank, the bank never aimed to ban cryptocurrencies, which need legal status and the clarity in the sphere of taxation.

The question of legal status of cryptocurrency in the country is still raising many debates and misunderstandings. The last official document on the matter, an informational letter from the Federal Tax Service issued in the end of 2016, noted that cryptocurrencies are valuable.  The very form of the notice was rather inspiring due to its recommendatory nature.

It appears that Russia came a long way from objecting to the new phenomenon to the first trials to understand it. There is also a chance that the government started seeing an opportunity in the ground-breaking crypto technology.  The federal deputy Boris Titov, while speaking on the national forum, suggested to establish a “crypto valley” in Crimea, similar to the crypto valley in Switzerland.

Titov noted the potential of blockchain technology for government services, especially regarding the fight against corruption. The main risk, mentioned by most of the speakers, is the anonymity of transactions.

Despite the possible risks, according to Alexander Ivanov, the founder of the Russian blockchain platform Waves, the whole trend is already too big and now the government can only admit it.

Most speakers expressed the opinion that it is very important to develop an attractive legislative base for cryptotechnologies to welcome investors and businesses communities into the country.

This is just the beginning. Elina Sidorenko, head of the cross-disciplinary group and Professor of Law at Moscow Governmental Institute of International Affairs, said that the university is already developing a special educational program  targeted to prepare lawyers for working in the cryptoworld. According to Sidorenko, the legal  ecosystem is not ready for the era of smart-contracts”. By her suggestion, the country should start with raising professional lawyers who could handle the subject.

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